Leading mutual fund managers are tempering their investments in volatile emerging markets by monitoring political and economic developments on a daily basis.

Through the third quarter, the sector yielded an 18% return, which makes it far and away the industry's hotspot. The foreign markets more than doubled the performance of U.S. funds in the third quarter.

Todd Henry, a portfolio specialist with T. Rowe Price, told The Chicago Tribune, "We keep a close eye on the political situation in Latin America, especially with very big elections coming up in Mexico and Brazil next year. If we see candidates gaining popularity we're concerned about, we may put some of our money from those markets into a defensive market like Chile."

Latin American funds were up 29% in the third quarter. The yearly return is 45%, and a steady 13% for the ten-year period.

Although Japan is not an emerging market, its recent performance puts it on par with Latin America. In the third quarter, Japanese stocks returned 18%, despite their puny 1.24% ten-year return.

Russian oil stocks and Turkish bank stocks are reportedly the right ways to go long-term, experts say.

Henry said his firm advises emerging market novices to choose a global fund first.

"[We] would encourage investors with no exposure to them at all to make their first step into a global portfolio instead of a regional one. That way, if the fund's portfolio managers have concern about Latin America, they can shift some money to an entirely different part of the world."

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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